SHANKARRAO BHAGWANTRAO PATIL ETC. versus THE STATE OF MAHARASHTRA & ORS. on 20 September 2021

[2021] 9 S.C.R. 239

SHANKARRAO BHAGWANTRAO PATIL ETC.

v.

THE STATE OF MAHARASHTRA & ORS.

(Civil Appeal Nos. 5712-5713 of 2021)

SEPTEMBER 20, 2021

[HEMANT GUPTA AND V. RAMASUBRAMANIAN, JJ.]

Land Acquisition Act, 1894 – Compensation – Deductiontowards development cost – Appellants’ land acquired –Compensation awarded by Land Acquisition Collector – Dissatisfied,reference sought – Reference Court awarded compensation at therate of Rs.70 per square feet – In appeal, High Court reduced thecompensation to Rs.317/- per square meter (29 per square feet) –Held: Land in question was rocky and had a moorum soil – Suchland is not cultivable – In the facts of the present case, deductiontowards the development cost at the rate of 50% is warranted –Order of the Reference Court is justified in law – High Court reducedthe compensation drastically without any reasonable basis –Appellant entitled to a compensation at the rate of Rs.70/- persquare feet from the date of award by the Land Acquisition Collectorwith interest as directed – Constitution of India – Art.142.

Land Acquisition Act, 1894 – Compensation – Exemplar of asmaller plot as compared to a larger area – Deductions on accountof – Discussed.

Disposing of the appeals, the Court

Held: 1.1 The reliance of the appellant on the ExemplarExhibit 31 (one of the two sale deeds relied on by the appellant,the other being Exhibit 30) is absolutely untenable and based ona false representation. Exhibit 31 is excluded from considerationinter alia for the reason that the property was sold on 4.9.1996,but still it continued to be reflected in the name of the vendorand even the permission to raise construction after the sale wasgranted to the vendor. Exhibit 30 is part of the same surveynumber whereby land was sold at the rate of Rs.137.76 squarefeet. In the present case, there is no evidence that the saleexemplar Exhibit 30 was a part of any developed layout but is an

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Aisolated instance of sale. Such sale of a small area as compared tothe acquisition of 9000 square meters can be taken intoconsideration after a suitable deduction is made on account ofthe development cost. The land in question was rocky and had amoorum soil. Such land is not cultivable. Still further, the Statehas taken possession of a part of the land in 1984 and anotherBpart in 1992 as is apparent from the reading of the two awards ofthe Special Land Acquisition Officer. It has also come on recordthat the land, subject matter of the appeals, is similarly situatedand forms a part of Bhoom Municipal Council. The Bhoom townhas a small population of 17150. The possession of the land wasCtaken for construction of government quarters and a road. Sincethe use of the land for a government quarter was known, therefore,the smaller area was sold keeping in view the intended use ofthe land acquired for the residential purposes. The deduction of50% is proper as the sale deed was executed after 11 years ofpossession of rocky land and moorum soil was taken. Therefore,Ddeduction towards the development cost at the rate of 50% iswarranted in the facts of the present case. Thus, the compensationto be awarded is (137.76/2 = 69 rounded off to Rs.70 per squarefeet) which was the market value assessed by the Reference Courtas well. [Paras 10, 16][246-A-D; 249-B-F]

EMeharawal Khewaji Trust v. State of Punjab (2012) 5SCC 432 : [2012] 4 SCR 24 – held inapplicable.

Chimanlal Hargovinddas v. Special Land AcquisitionOfficer, Poona and Anr. (1988) 3 SCC 751 : [1996] 2SCR 444; Lal Chand v. Union of India and Anr. (2009)F15 SCC 769 : [2009] 13 SCR 622; Kasturi and Ors. v.State of Haryana (2003) 1 SCC 354 : [2002] 4 Suppl.SCR 117 – relied on.

1.2 The order of the Reference Court is justified in lawwhereas the High Court has reduced the compensation drasticallyGwithout any reasonable basis. Therefore, the appellant is entitledto a compensation at the rate of Rs.70/- per square feet fromthe date of award by the Land Acquisition Collector. Apart fromstatutory benefits, such compensation has been arrived atkeeping in view the development activity that has already takenH

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place by the virtue of possession of the acquired land deliveredto the State. The possession of the land acquired was taken inthe year 1984/ 1992. Instead of remitting the matter to the LandAcquisition Collector for determination of the compensation foruse and occupation by the State, it is deemed appropriate to decidethis issue in the present appeal itself. There is no evidence thatsuch land was being put to use by the landowners even prior tothe taking of possession by the State. But the fact remains thatthe possession has been taken without payment of compensationdepriving the landowners of the right to use land. Therefore, theland owners would be entitled to interest on the amount ofcompensation awarded at the rate of 9% per annum from thedate of possession which was taken in the year 1984/1992 till thedate of notification under Section 4 of the Land Acquisition Act,1894 on the amount awarded after acquisition that is the sum ofRs.70/- per square feet. The appellant shall be entitled to othersstatutory benefits on the compensation amount of Rs.70/- persquare feet from the date of award till realization. [Paras 17-19][249-F-G; 250-A-E]

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Maya Devi (Dead) Thr. Lrs v. State of Haryana andAnr. (2018) 2 SCC 474 : [2018] 1 SCR 225; R.L. Jainv. DDA & Ors. (2004) 4 SCC 79 : [2004] 2 SCR 1156;Madishetti Bala Ramul v. Land Acquisition Officer(2007) 9 SCC 650 : [2007] 7 SCR 222; Tahera Khotoon& Ors. v. Revenue Divisional Officer/Land AcquisitionOfficer & Ors. (2014) 13 SCC 613; Balwan Singh &Ors. v. Land Acquisition Collector & Anr. (2016) 13SCC 412 : [2016] 2 SCR 163 – referred to.

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A[2009] 13 SCR 622

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.5712-5713 of 2021.

From the Judgment and Order dated 22.03.2016 of the High Courtof Judicature at Bombay, Bench at Aurangabad in First Appeal No.1373of 2003 and First Appeal No.63 of 2004 and order dated 27.07.2016 inReview Application Civil No.81 of 2016 in First Appeal No.1373 of 2003.

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WithCCivil Appeal Nos.5714-5715 of 2021

Jayant Bhushan, Sr. Adv., Atul Babasaheb Dakh, Tushar Bhushan,Amartya Bhushan, Ketan Paul, Advs. for the Appellants.

Sachin Patil, Rahul Chitnis, Aaditya A. Pande, Geo Joseph, Advs.for the Respondents.D

The Judgment of the Court was delivered by HEMANT GUPTA, J.

1. The present appeals are directed against the order dated22.03.2016 passed by the High Court of Judicature at Bombay,EAurangabad in the First Appeals filed by the land owners and the Statedetermining the compensation of the land acquired at the rate of Rs.317/- per squaremeter (29 per squarefeet) apart from the statutory benefits,thus reducing the compensation awarded by the learned Reference Courton 13.08.2003 at the rate of Rs. 70 per squarefeet.F

2. The land of the appellants measuring 40R (1R = 100 squaremeters or 1089 square feet) comprising of a land survey no. 220/4/bwas taken into possession by the State through private negotiations on14.09.1984. The market price payable to the landowners was to be settledby negotiations but, since the price could not be decided, therefore theGland comprising land survey no. 220/4/b admeasuring 40R was intendedto be acquired vide notification dated 04.02.1999 under Section 4 of TheLand Acquisition Act, 1894[1] published in the Maharashtra GovernmentGazette. Such land is the subject matter of Civil Appeals arising out ofSLP (Civil) Nos. 33471-33472 of 2016.The State also intended to acquire H1 For short the ‘Act’

land admeasuring 30R and 20R comprising of Survey Number 212/band 220/4 vide the above said notification as well. The possession ofsuch land was taken on 21.10.1992. Such land is the subject matter ofCivil Appeals arising out of SLP (Civil) Nos.33876-33877 of 2016. Theother statutory requirements were completed and two separate awardswere announced. The learned Special Land Acquisition Collectordetermined market value considering the two sale instances both dated24.04.1997 forming a part of the land comprising of Survey No. 220 ofan area of 92 square meters sold for a sum of Rs. 3500/-. The firstaward was announced on 26.03.2002in respect of the land admeasuring40R. The learned Special Land Acquisition Collector awarded a sum ofRs.232/- per squaremeter. The second award was announced by theLand Acquisition Collector on 6.4.2002 awarding a compensation ofRs.217/- per squaremeter for 1390 squaremeters of land out of SurveyNo. 220/4 and Rs.168/- per square meters comprising of Survey No.212/1/b, whereas in respect of the land admeasuring 100 square metersout of Survey No. 212/1/b, a compensation of Rs. 179/- per square meterwas granted.

3. The land owners dissatisfied with the amount of compensation,sought reference under Section 18 of the Act claiming compensation atthe rate of Rs. 150/-per square feet for the entire land measuring 90R. Ithas also come on record that the land, subject matter of the appeals, issimilarly situated and forms a part of Bhoom Municipal Council. Thepopulation of Bhoom Municipal Council is 17510and the land is describedin the revenue record as barren land. PW 1 – Shankarrao had admittedthat the land was rocky and moorum (powdered rock) soil.

4. The land owners relied upon two sale deeds, i.e. Exhibit 30dated 05.04.1995 whereby the landfalling under Survey No. 220 wassold for a sum of Rs. 3,00,051/- in pursuance of an agreement to selldated 02.11.1994. A sum of Rs. 1,00,000/- was to be paid before 1.11.1995.The Reference Court calculated the rate of the sale price, it was recordedto be Rs. 137.76 per square feet. The rate has not been disputed beforethe High Court or even before this Court. The land owners relied uponanother sale deed i.e. Exhibit 31 dated 04.09.1996 whereby the landmeasuring 49.5 x 16.5 feet(816. 75 square feet) was sold for a sum ofRs.1,90,000/-that is Rs. 232.50 per square feet. Such property is describedas Municipal Council New Property Number 1480 and 1480/1. Thelearned Reference Court arrived at the compensation of Rs.70/- per AB

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Asquare feet of the land acquired after deducting 20% of the pricementioned in Exhibit 30 and 31 on account of development charges.

5. However, the High Court in further appeals filed by the Stateand the land owners dismissed the appeal of the land owners forenhancement but reduced the compensation to Rs.317/-square meterB(29 per squarefeet). The High Court found that the sale instances are inrespect of the land but in fact the houses were constructed thereontherefore, the sale deed includes the cost of construction of the house,such cost has to be reduced. The High Court also held that since theacquisition is of a large area of 9000 square meters, therefore, the suitabledevelopment charges are required to be deducted as the sale instancesCpertain to the smaller area. After discussing the evidence, the High Courtredetermined the compensation as mentioned above.

6. Before this Court, Mr. Jayant Bhushan, learned Senior Advocateon behalf of the land owners argued that as per Exhibit 30, a plotmeasuring 66 x 33 feet (2178 square feet/ 202 square meter) was soldDat the rate of Rs.137.76 per square feet. Another sale instance Exhibit31, a plot measuring 815.75 square feet was sold at the rate of Rs.232.62per square feet. The land, subject matter of the sale instance Exhibit 30and 31 are close to the acquired land inasmuch as the land in Exhibit 31is just 150 feet from the acquired land. It is argued that the sale instancesEare of an open land. Therefore, the finding of the High Court that theland had houses is not supported by evidence as the permission forconstruction was granted only in the year 1997 after the acquisition ofsale deed dated 1996. The learned counsel further argued that in viewof the judgment of this Court in Meharawal Khewaji Trust v. State ofPunjab[2], the highest rates from the sale exemplar is to be taken, therefore,FExhibit 31 is a more suitable exemplar which is required to be madethebasis for determination of compensation.

7. The learned counsel for the appellant also relied upon thejudgment of this Court reported as Maya Devi (Dead) Thr. Lrs v.State of Haryana and Anr.[3] that 33% deduction could be made forGlarge lands being acquired when the exemplar is for a smaller area.Thus, with Exhibit 31 having the sale price of Rs.232/- per squarefeetand 33% deduction is made, the rate would come out to be Rs.160 per 2 (2012) 5 SCC 432H3 (2018) 2 SCC 474

squarefeet. Therefore, the amount claimed by the land owners i.e. atthe rate of Rs.150/- per square feet should have been awarded.

8. It is also argued that since the possession was taken in the year1984/ 1992 though the notification under Section 4 of the Act waspublished in the year 1999, therefore, an interest on the amount ofcompensation awarded from the date of possession should have beengranted. The reliance is placed upon judgments of this Court reported asR.L. Jain v. DDA & Ors.[4], Madishetti Bala Ramul v. LandAcquisition Officer[5], Tahera Khotoon & Ors. v. RevenueDivisional Officer/Land Acquisition Officer & Ors[6]., Balwan Singh& Ors. v. Land Acquisition Collector & Anr.[7]. It is thus argued thatthe order of the High Court to remit the matter to the Collector fordetermination of the compensation from the date of possession till thedate of notification is clearly erroneous and the land owners would remainfurther deprived of the value of the acquisition of land.

9. On the other hand, Mr. Sachin Patil, learned counsel for theState argued that houses were constructed on the land in question whichis evident from the Tax Assessment Register for the period 1983-84 till1.1.97 (Annexure A-3) filed by the appellant with additional documentsshowing the assignment of House property number. In fact, the saledeed itself is of Municipal Council Property No. 1186/1 (New No. 1481/1). Still further, the permission to construct relied upon by the appellantis dated 28.1.1997 which was granted to the vendor, though the landstood sold to the appellant on 4.9.1996. Thus, the entire story of the landbeing an open land is not true. It is argued that the land, subject to thesale exemplar is a very small area as against the large track of acquiredland measuring almost 2 acres. The sale exemplars relied upon by theappellants are of the smaller area. Therefore, the deduction of atleast50% is required to be made towards the land required for developmentworks apart from the deduction on account of the value of the houseconstructed. It is argued that the sale exemplars Exhibit 30 and 31respectively are not relevant since they are not a part of the land whichis the subject matter of the acquisition. In fact, the sale exemplars referredto the Reference Court are in respect of the land acquired. Therefore,the said sale instances become the most relevant exemplars.

4 (2004) 4 SCC 79

5 (2007) 9 SCC 650

6 (2014) 13 SCC 613

7 (2016) 13 SCC 412

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A10. We have heard the learned counsel for the parties.We findthat the Exemplar Exhibit 30 is in respect of Survey No. 220 of a saledeed executed on 05.04.1995. Exemplar 31 is not a part of Survey No.220 but has been assigned Municipal Council New Property No. 1480and 1481/1, because the land is situated close to the acquired land. Theargument that the construction was raised in pursuance of the permissionBgranted on 28.01.1997, therefore, the finding of the High Court that thehouse was already constructed is not tenable. We find that the relianceof the appellant on the Exemplar Exhibit 31 is absolutely untenable andbased on a false representation. A perusal of the permission dated28.01.1997shows that it was granted to Govind Rajaram Bhagwat forCthe construction of a house on Plot No. 1480/1, vendor. Such propertyhad already been sold on 04.09.1996. Still further, the house taxassessment register produced by the appellant shows that the propertywas assessed to house tax in the name of Govind Rajaram Bhagwatfrom the year 1983-1984 till 01.01.1997. Therefore, such land had ahouse constructed thereon, which was assessed to House Tax as well.DThe commencement certificate is not reliable since it is granted to thevendor of the purchaser. Therefore, Exhibit 31 is excluded fromconsideration.

11. Thus, the judgment of this Court in Mehrawal Khewaji Trustis of no help to the appellant inasmuch as the best exemplar Exhibit 31Ereferred to by the appellant has been found to be a non-bonafidetransaction. In the absence of such an exemplar, only Exhibit 30 remainsto be examined in which, the plot of land, of the same survey numberwas sold at the rate of Rs. 137.76 per square feet.

12. The question of deductions on account of an exemplar of aFsmaller plot as compared to a larger area under acquisition has come upfor consideration before this Court in Chimanlal Hargovinddas v.Special Land Acquisition Officer, Poona and Anr.[8]. This Court heldas under:

“8. …….The first two grounds are devoid of merit. It is commonGknowledge that when a large block of land is required to be valued,appropriate deduction has to be made for setting aside land forcarving out roads, leaving open spaces, and plotting out smallerplots suitable for construction of buildings. The extent of the arearequired to be set apart in this connection has to be assessed byH8 (1988) 3 SCC 751

SHANKARRAO BHAGWANTRAO PATIL ETC. v. THE STATEOF MAHARASHTRA & ORS. [HEMANT GUPTA, J.]

the court having regard to the shape, size and situation of theconcerned block of land etc. There cannot be any hard and fastrule as to how much deduction should be made to account for thisfactor. It is essentially a question of fact depending on the factsand circumstances of each case. It does not involve drawing uponany principle of law.

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12. In the result appellant must be awarded compensation atRs 7000 per acre subject to deduction or allowance of 25 per centto account for land required to be set apart for roads, open spacesetc. In other words appellant will be entitled to be paidcompensation for 13 acres 7 gunthas comprised in Survey No. 85at Rs 5250 per acre (Rs 7000 less 25 per cent i.e. less 1750 = Rs5250) in place of the lesser sum awarded by the High Court.Appeal must be partly allowed to this extent accordingly.”

13. In the aforesaid case, reliance of the landowners was on anexemplar which reflected the sale price of Rs. 20,000/- per acre whichwas situated on the Ganeshkhand Road as against Rs. 7,000/- per acreassessed by the High Court. The Court noticed that the unloading wasRs. 13,000/- per acre which works out at 65%.

14. In the judgment reported as Lal Chand v. Union of Indiaand Anr.[9], this Court held that deduction for development is to be madeto arrive at the market value of large tracts of undeveloped agriculturalland (with potential for development) the deduction varies from 20% to75% of the price of such developed plots. This Court held as under:

“13. The percentage of “deduction for development” to be madeto arrive at the market value of large tracts of undevelopedagricultural land (with potential for development), with referenceto the sale price of small developed plots, varies between 20% to75% of the price of such developed plots, the percentage dependingupon the nature of development of the layout in which the exemplarplots are situated.

14. The “deduction for development” consists of two components.The first is with reference to the area required to be utilised fordevelopmental works and the second is the cost of the development A

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works. For example, if a residential layout is formed by DDA orsimilar statutory authority, it may utilise around 40% of the landarea in the layout, for roads, drains, parks, playgrounds and civicamenities (community facilities), etc.

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15. The development authority will also incur considerableBexpenditure for development of undeveloped land into a developedlayout, which includes the cost of levelling the land, cost ofproviding roads, underground drainage and sewage facilities, layingwater lines, electricity lines and developing parks and civilamenities, which would be about 35% of the value of the developedplot. The two factors taken together would be the “deduction forCdevelopment” and can account for as much as 75% of the cost ofthe developed plot.

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22. Some of the layouts formed by the statutory developmentDauthorities may have large areas earmarked for water/sewagetreatment plants, water tanks, electrical substations, etc. in additionto the usual areas earmarked for roads, drains, parks, playgroundsand community/civic amenities. The purpose of the aforesaidexamples is only to show that the “deduction for development”factor is a variable percentage and the range of percentage itselfEbeing very wide from 20% to 75%.”

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15. This Court in the judgment reported as Kasturi and Ors. v.State of Haryana[10], held that there may be various factual factors whichmay have to be taken into consideration while applying the cut in paymentof compensation towards developmental charges, maybe in some casesFit is more than 1/3rd and in some cases less than 1/3rd. This Court heldas under:

“7 ……..However, in cases of some land where there are certainadvantages by virtue of the developed area around, it may help inreducing the percentage of cut to be applied, as the developmentalGcharges required may be less on that account. There may bevarious factual factors which may have to be taken intoconsideration while applying the cut in payment of compensationtowards developmental charges, maybe in some cases it is morethan 1/3rd and in some cases less than 1/3rd. It must be H10 (2003) 1 SCC 354

SHANKARRAO BHAGWANTRAO PATIL ETC. v. THE STATEOF MAHARASHTRA & ORS. [HEMANT GUPTA, J.]

remembered that there is difference between a developed areaand an area having potential value, which is yet to be developed.The fact that an area is developed or adjacent to a developedarea will not ipso facto make every land situated in the area alsodeveloped to be valued as a building site or plot, particularly whenvast tracts are acquired, as in this case, for development purpose.”

16. Exhibit 30 is part of the same survey number whereby landwas sold at the rate of Rs.137.76 square feet. In the present case, thereis no evidence that the sale exemplar Exhibit 30 was a part of anydeveloped layout but is an isolated instance of sale. Such sale of a smallarea as compared to the acquisition of 9000 square meters can be takeninto consideration after a suitable deduction is made on account of thedevelopment cost. The land in question was rocky and had a moorumsoil. Such land is not cultivable. Still further, the State has taken possessionof a part of the land in 1984 and another part in 1992 as is apparent fromthe reading of the two awards of the Special Land Acquisition Officer.The Bhoom town has a small population of 17150. The possession of theland was taken for construction of government quarters and a road.Since the use of the land for a government quarter was known, therefore,the smaller area was sold keeping in view the intended use of the landacquired for the residential purposes. The deduction of 50% is proper asthe sale deed was executed after 11 years of possession of rocky landand moorum soil was taken. Therefore, we find that deduction towardsthe development cost at the rate of 50% is warranted in the facts of thepresent case. Thus, the compensation to be awarded is (137.76/2= 69rounded off to Rs.70 per square feet) which was the market valueassessed by the Reference Court as well.

17. We find that the order of the learned Reference Court is justifiedin law whereas the High Court has reduced the compensation drasticallywithout any reasonable basis. Therefore, we find that the appellant isentitled to a compensation at the rate of Rs.70/- per square feet fromthe date of award by the Land Acquisition Collector. Apart from statutorybenefits, such compensation has been arrived at keeping in view thedevelopment activity that has already taken place by the virtue ofpossession of the acquired land delivered to the State.

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Arespect of the argument for determination of amount of compensationfrom the date possession was taken by the State till the date of notificationunder Section 4 of the Act, judgments relied upon by the appellant havebeen referred to in para 8 above. A perusal of the said judgments showsthat grant of payment of interest for the pre-acquisition period is in thenature of an order passed under Article 142 of the Constitution to doBsubstantial justice. Keeping in view the aforesaid judgments, we findthat instead of remitting the matter to the Land Acquisition Collector fordetermination of the compensation for use and occupation by the State,we deem it appropriate to decide this issue in the present appeal itself.

19. There is no evidence that such land was being put to use byCthe landowners even prior to the taking of possession by the State. Butthe fact remains that the possession has been taken without payment ofcompensation depriving the landowners of the right to use land. Therefore,the land owners would be entitled to interest on the amount ofcompensation awarded at the rate of 9% per annum from the date of Dpossession which was taken in the year1984/1992 till the date ofnotification under Section 4 of the Act on the amount awarded afteracquisition that is the sum of Rs.70/- per square feet. The appellant shallbe entitled to others statutory benefits on the compensation amount ofRs.70/- per square feet from the date of award till realization. With theabove said directions, the appeals are disposed of.E

Divya Pandey

Appeals disposed of.

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